Rosewood Hotel Case Study

Ali Yudhi Dame Reiny Dewi Aryani Dewi Sagita Frisca Listya

Rosewood Hotels & Resorts : Branding to Increase Customer Profitability and Lifetime Value l the SIXers MM UI 2012

ROSEWOOD HOTELS & RESORTS (ROSEWOOD) is a private hotel management company . • operated a “collection” of individually branded unique hotels & resorts • Has global reputation with iconic luxury hotels

Rosewood Facts

1991 •Lanesborough, London, England 1979 • The Caroline Rose Hunt Trust Estate

1980 •1st hotel— The Mansion on Turtle Creek, Dallas, Texas

1982 •Hotel Bel-Air, Los Angeles, California

1989 •Selling the Hotel BelAir and Hotel Hana Maui for record prices

1985 •Hotel Crescent Court, Dallas •The Crescent Club & The Spa at The Crescent

1984 • Hotel Hana Maui, Hawaii

1992 •Caneel Bay, St. John, U.S.V.I. •Little Dix Bay, Virgin Gorda, B.V.I

2002 • Jumby Bay, Antigua.

2001 •Resort, Sunny Isles Beach, Florida 1995 •Hotel Al Khozama •Al Faisaliah Hotel

1997 •The Bristol in Panama City, •Las Ventanas al Paraiso , Los Cabos, Mexico, •The Dharmawangsa, Jakarta

HISTORY Rosewood Facts

2000 •The Carlyle, New York •King Pacific Lodge, British Columbia, Canada

1999 •Badrutt’s Palace •St. Moritz, Switzerland •Al Faisaliah Hotel •Hotel Seiyo Ginza

Properties Growth 25 20 15 10 5 0

25 13

12 6

10

8

6 0

5 1

2 4

1996 2003

Rosewood Facts

Luxury Properties • Local Character • Local Culture

Unique

Soft

• One of a kind • Flexible & Creative

• Complementary • Not intrusive

Rosewood Facts

BRAND AUDIT CSR

Questioner

(Customer Service

Reservation)

Customer

Travel Agents

Employee

“did not really know the name Rosewood even they had staying at the property”.

“The brand is not nearly as important as the property”.

“Don’t see great opportunity, few business opportunity”.

“They know Rosewood after the travel agents started telling them if a hotel was Rosewood”.

“Rosewood is a collection of brand. It is not a brand”.

“very low awareness, less than 5% those who know are ‘past’ guest”.

Rosewood Facts

Only 5% had stayed in more than Rosewood Properties

40 % of guest enjoyed return visit

Rosewood Management Goals Increasing Connection between Rosewood properties Increasing Cross Properties Ussage from 5% to 10% Create Rosewood Junkies Building Strong Brand Equity

Rosewood Facts

Brand Brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods/services of one seller /group of seller and to diferentiate them from those competitor (Kotler) Brand Equity is the added value endowed on products & services that reflected in:

Rosewood

• the way customers think, feel and act with respect to the brand, • Price, market share & profitability the brand commands for the firm.

Theory

Building Brand Equity

The initial choices for the brand elements or identities making up the brand

Rosewood

The product and service and all accompanying marketing activities and supporting marketing program

Theory

Other associations indirectly transferred to the brand by linking it to some other entity

Aakers Brand Equity Model

Rosewood

Theory

Calculating Customer Lifetime Value Customer lifetime value (CLV) describes the net present value of the stream of future profits expected over the customer’s lifetime purchases

Rosewood

Theory

Branding Strategy

Corporate Brand Name

Rosewood

Analysis

Individual Brand Name

Pro’s and Con’s Corporate Branding

Individual Branding

Pro

• Unique & represent local culture • No need additional cost (cost efficiency) • Flexible Internal Management • Already has loyal customer

Contra • Inconsistency in brand wide performance standard

Rosewood

Analysis

• Better CLTV • Collective Experience (duplicate standard) • Consistent Service • Encourage guest to use more than one properties • Better Brand Recognition • High customer loyalty (Rosewood Junkies) • • • •

Increase Marketing Cost for re-branding Resistant from owner, guest, manager Guest feel alienate Bad Reputation may impact others

Revenue and Cost Analysis Without Rosewood Branding With Rosewood Corporate (2003) Branding

Total number of unique guests (a) Average daily spend (b) Number of days average guest stays Average gross margin per room Average number of visits per year per guest

115,000.00 $750.00 2 32% 1.2

115,000.00 $750.00 2 32% 1.2

Average marketing expense per guest (systemwide) d Average new guest acquisition expense (system-wide) Total number of repeat guests (e)

$130.00

$138.70

$150.00

$150.00

19,169

24,919

Of which: Total number of multi-property stay guests Number of Multiproperty Guest Average Guest Retention Rate (f) Average Gross Profit per Guest

5,750

11,500

5% 16.67% $576.00

10% 21.67% $624.00

Rosewood

Analysis

Total NPV of CLTV without Corporate Brand Years Gross profit per guest Acquisition expense per new guest Marketing expense per guest Net Profit per Guest

0

1

2

3

4

5

6

609.50 646.07 684.83 725.92 769.48 815.65 115.00 132.60 135.25 137.96 140.72 143.53 146.40 (115.00) 476.90 510.82 546.88 585.21 625.95 669.25

Retention factor

1.00

0.22

0.05

0.01

0.00

0.00

Discount factor

0.93

0.86

0.79

0.74

0.68

0.63

(115.00) 441.58

94.90

20.38

4.38

0.94

0.20

Net Present Value (NPV)

448.62

Rosewood

Analysis

Total NPV of CLTV with Corporate Brand Years Gross profit per guest Acquisition expense per new guest Marketing expense per guest Net Profit per Guest

0

1

2

3

4

5

6

661.44 701.13 743.19 787.79 835.05 885.16 115 142.86 147.14 151.56 156.10 160.79 165.61 (115.00) 518.58 553.98 591.64 631.68 674.27 719.55

Retention factor

1.00

0.22

0.05

0.01

0.00

0.00

Discount factor

0.93

0.86

0.79

0.74

0.68

0.63

(115.00) 480.17 102.92

22.05

4.72

1.01

0.22

Net Present Value (NPV) Total NPV

Rosewood

496.09

Analysis

Recommendation • Adopt Corporate Branding • Strengthen Rosewood’s Brand Equity

Rosewood

Recommendation

Brand Awareness Subjective : • Become a Top of Mind Brand

Rosewood

External drive way:

• Promotion & Ads in Media (online & offline) • Launch Event Promotion

Analysis

Internal Drive way:

• Service Standardization • High Quality • Rosewood Careers Management

Brand Loyalty Subjective :

Drive way :

• Retain The loyal customer

• Travel Package • Thematic Events • Develop Community to pursue Rosewood Junkies • Membership (platinum & titanium) • Annual Gathering Private & Exclusive Service

Rosewood

Analysis

Brand Association Subjective :

Drive Way :

• Uniqueness “one of a kind” • Luxurious

• Premium Pricing • High Quality Services • Luxurious Architecture & Design

Brand Quality A Sense of Place

Rosewood

Analysis

Rosewood

Video

Thank You